Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105a.jpg" width="353">
The payroll processor ADP indicated in its latest National Employment Report that October private nonfarm payrolls fell 157,000 after a revised 25,000 September decline. The latest was the third decline in as many months and it was the largest since November 2002. During the last three months payrolls have fallen 0.2%.
The U.S. Bureau of Labor Statistics will report on October payroll employment this Friday. Last month, the 25,000 worker decline in ADP&#39;s measure of private nonfarm payrolls was accompanied by a 168,000 (-0.7% y/y) worker decline in the BLS measure of private sector payrolls.
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
By the ADP measure, goods producing payrolls fell by 126,000 (-3.3% y/y). The largest decline was amongst medium sized payrolls which fell 65,000 (-3.6% y/y) followed by a 36,000 (-2.0% y/y) drop in small sized payrolls. Large payrolls fell 25,000 (-5.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105b.jpg" width="353"> 
Employment in the manufacturing sector fell 85,000 (-3.4% y/y) It has fallen in each month since late-2005.
Employment in the service producing industry added to the weakness in the goods producing sector and payrolls fell 31,000 (+0.9% y/y). It was their first decline since 2002. Medium sized payrolls fell 26,000 (+0.7% y/y) and large service producing payrolls dropped by 16,000 (-0.3% y/y). Small service producing payrolls rose by 11,000 (1.4% y/y).
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_october_08.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.<div> </div>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>-157,000</td>
<td>-26,000</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>


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The payroll processor ADP indicated in its latest National Employment Report that October private nonfarm payrolls fell 157,000 after a revised 25,000 September decline. The latest was the third decline in as many months and it was [...]

ADP Report: Payroll Employment Off 157,000

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105d.jpg" align="left" border="0" height="265" width="353">
The Composite Index for the nonmanufacturing sector from the
Institute for Supply Management fell sharply in October. It declined to
44.4 from an unrevised 50.2 during September. The figure, which was
weaker than Consensus expectations, was the lowest in the series'
relatively brief ten year history.It rivaled the low during the 2001
recession.
The nonmanufacturing business activity sub-index also fell
sharply to 44.2 which was the lowest level since this past January.
Each figure was the lowest since the last recession. Since the series'
inception in 1997 there has been a 48% correlation between the level of
the business activity index for the nonmanufacturing sector and the Q/Q
change in real GDP for the services and the construction sectors.
The employment index fell to 41.5, a new low for the series.
Since the series' inception in 1997 there has been a 56% correlation
between the level of the ISM nonmanufacturing employment index and the
m/m change in payroll employment in the service-producing plus the
construction industries.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105e.jpg" align="right" border="0" height="265" width="353">
The new orders sub-index fell sharply to a recession level of
44.0.
Pricing power also collapsed. The reading of 53.4 was its
lowest level since 2003. Since inception ten years ago, there has been
a 60% correlation between the price index and the q/q change in the GDP
services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report
On Business</cite>®, the composite index is calculated as an
indicator of the overall economic condition for the non-manufacturing
sector. It is a composite index based on the diffusion indexes for four
of the indicators (business activity, new orders, employment and
supplier deliveries) with equal weights. The latest report from the ISM
can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
ISM surveys more than 370 purchasing managers in more than 62
industries including law firms, hospitals, government and retailers.
The nonmanufacturing survey dates back to July 1997.
Interpreting the Great Moderation: changes in the
volatility of economic activity at the macro and micro levels from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr334.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>44.4</td>
<td>50.2</td>
<td>53.3</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>53.4</td>
<td>70.0</td>
<td>66.1</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>
ADP Report: Payroll Employment Off
157,000 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105a.jpg" align="left" border="0" height="265" width="353">
The payroll processor ADP indicated in its latest National
Employment Report that October private nonfarm payrolls fell 157,000
after a revised 25,000 September decline. The latest was the third
decline in as many months and it was the largest since November 2002.
During the last three months payrolls have fallen 0.2%.
The U.S. Bureau of Labor Statistics will report on October
payroll employment this Friday. Last
month, the 25,000 worker decline in ADP's measure of private nonfarm
payrolls was accompanied by a 168,000 (-0.7% y/y) worker decline in the
BLS measure of private sector payrolls.

According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90.

By the ADP measure, goods producing payrolls fell by 126,000
(-3.3% y/y). The largest decline was amongst medium sized payrolls
which fell 65,000 (-3.6% y/y) followed by a 36,000 (-2.0% y/y) drop in
small sized payrolls. Large payrolls fell 25,000 (-5.0% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105b.jpg" align="right" border="0" height="265" width="353">

Employment in the manufacturing sector fell 85,000 (-3.4% y/y)
It has fallen in each month since late-2005.
Employment in the service producing industry added to the
weakness in the goods producing sector and payrolls fell 31,000 (+0.9%
y/y). It was their first decline since 2002. Medium sized payrolls fell
26,000 (+0.7% y/y) and large service producing payrolls dropped by
16,000 (-0.3% y/y). Small service producing payrolls rose by 11,000
(1.4% y/y).
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's 
USECON database;
historical data go back to December 2000. The figures in this report
cover only private sector jobs and exclude employment in the public
sector, which rose an average 11,083 during the last twelve months
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_october_08.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.
<div> </div>

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<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>-157,000</td>
<td>-26,000</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
U.S. Challenger Layoffs Highest
Since 2004 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105c.jpg" align="left" border="0" height="265" width="353">
According to the Challenger, Grey &amp; Christmas survey,
layoffs jumped last to their highest level since January of 2004. The
rise to 112,884 was a near-doubling from last October and the
three-month level layoffs at 98,905 was its highest since early 2006.
The rise in layoffs last month was led by 17,949 cuts in
financial industries and 15,692 cuts in the automotive industry. There
also were 6,946 layoffs in the consumer goods sector, 6,301 in the
electronics industries and 5,930 layoffs in the telecommunication
businesses
During the last ten years there has been a 76% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved
through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell 3.2%
y/y.
The causes and consequences of economic
restructuring: evidence from the early 21st century from the
Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2008/200841/200841abs.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>112,884</td>
<td>95,094</td>
<td>78.9%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
Services Sectors Tank in US and in
Europe 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105f.jpg" align="left" border="0" height="265" width="353">
The chart serves as yet another reminder as to why it has been
loopy for observers to have insisted that Europe and the US had become
disconnected economically &#8211; the so-called de-coupling argument. The MFG
sectors across countries are always closely connected because they
trade goods and compete in the same markets for the same business. The
services sectors have a lower incidence of tradable services &#8211; much
lower than for goods. Still, the overall EMU and US economies have been
on such similar cycles that their two service sector indices, with very
few exceptions, have been on the same page. 
 

The EMU in country level measures are mostly on their
respective lowest readings since May of 2000. The US measure is in its
bottom 13% of its range &#8211;also very weak. Germany&#8217;s measure is &#8216;only&#8217; in
the bottom 28% of its range. 
 

The drop in the EMU index in October is its largest m/m drop
since May 2000 when the comparisons start. 
 

We can also see that consumer confidence is very low in most
of these same places. Since the service sector provides the bulk of the
jobs, this is an expected result. 
 

However we can also use this report as a double check on the
MFG report which earlier was reported to have fallen so sharply. These
two sectors are showing the same sharp onset of weakness. That tends to
imbue the signal with a greater veracity than if the result came from
just one survey. The weak signal therefore seems to be the result of a
real weakness in the economy rather than from some quirk of the
calendar or a peculiarity of one survey. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup><thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-13</td>
<td>45.76</td>
<td>48.44</td>
<td>48.46</td>
<td>47.55</td>
<td>48.45</td>
<td>50.37</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>48.31</td>
<td>50.25</td>
<td>51.39</td>
<td>49.98</td>
<td>51.49</td>
<td>51.78</td>
<td>28.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>47.54</td>
<td>50.14</td>
<td>48.04</td>
<td>48.57</td>
<td>48.96</td>
<td>53.05</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>45.68</td>
<td>49.42</td>
<td>48.47</td>
<td>47.86</td>
<td>47.63</td>
<td>48.32</td>
<td>0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>32.22</td>
<td>36.09</td>
<td>38.98</td>
<td>35.76</td>
<td>37.39</td>
<td>41.65</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>36.05</td>
<td>40.80</td>
<td>39.82</td>
<td>38.89</td>
<td>40.65</td>
<td>45.31</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU only</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (CIPs)</td>
<td>42.39</td>
<td>45.95</td>
<td>49.17</td>
<td>45.84</td>
<td>46.98</td>
<td>49.60</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">US NONFMG ISM</td>
<td>44.20</td>
<td>52.10</td>
<td>51.60</td>
<td>49.30</td>
<td>50.17</td>
<td>50.48</td>
<td>13.6%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">EU
Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU Index</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">EU Services</td>
<td>-10</td>
<td>-4</td>
<td>-2</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-14.92</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EMU</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-6</td>
<td>0</td>
<td>1</td>
<td>-1.67</td>
<td>2.17</td>
<td>5.79</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Cons Confidence</td>
<td>-24</td>
<td>-19</td>
<td>-19</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-1.11</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany-Consumer Confidence</td>
<td>-12</td>
<td>-9</td>
<td>-9</td>
<td>-10.00</td>
<td>-7.50</td>
<td>-3.83</td>
<td>34.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">France-Consumer Confidence</td>
<td>-32</td>
<td>-24</td>
<td>-23</td>
<td>-26.33</td>
<td>-23.83</td>
<td>-18.58</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ital-Consumer Confidence</td>
<td>-23</td>
<td>-22</td>
<td>-24</td>
<td>-23.00</td>
<td>-22.83</td>
<td>-22.83</td>
<td>13.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain-Consumer Confidence</td>
<td>-44</td>
<td>-39</td>
<td>-37</td>
<td>-40.00</td>
<td>-38.00</td>
<td>-29.08</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK-Consumer Confidence</td>
<td>-27</td>
<td>-23</td>
<td>-24</td>
<td>-24.67</td>
<td>-22.50</td>
<td>-15.25</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="5" class="firstcol">percentile
is over range since May
2000</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The Composite Index for the nonmanufacturing sector from the Institute for Supply Management fell sharply in October. It declined to 44.4 from an unrevised 50.2 during September. The figure, which was weaker than Consensus [...]

U.S. ISM Nonmanufacturing Index Fell Sharply: Recession Indicated

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104c.jpg" width="353">
The retail price for a gallon of regular gasoline fell by another twenty five cents last week. According to the U.S. Department of Energy survey, the price decline came on top of a twenty five cent drop during the prior week and the cost of $2.40 was the lowest since February of 2007. Prices have now fallen roughly $1.75 per gallon, or by forty percent, since their peak early this past July. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.46 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline fell another sixteen cents from last week&#39;s average to $1.41. In futures trading the November contract closed down further at $1.36 per gallon.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.
The slowing of U.S. economic growth and the relatively high price for gas has reduced demand for gasoline by 4.0% y/y, according to the U.S. Department of Energy. This was the largest y/y drop since late 1995 (the latest four weeks versus the same four weeks last year). The demand for all petroleum products also has softened, falling 7.8% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104d.jpg" width="353">
These DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell further last week to an average $65.68 per barrel, down by more than one-half from the high in July of $145.66. In futures trading yesterday, the two-month price for crude oil was $64.59 per barrel.
Last week ,prices for natural gas at $6.43 per mmbtu were near their lowest level since October of last year. The average price this month was nearly one-half below the high for natural gas prices in early-July of $13.19/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/03/08</th>
<th scope="col">10/27/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>2.40</td>
<td>2.66</td>
<td>-20.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>65.68</td>
<td>68.18</td>
<td>-30.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
</html>

The retail price for a gallon of regular gasoline fell by another twenty five cents last week. According to the U.S. Department of Energy survey, the price decline came on top of a twenty five cent drop during the prior week and the [...]

U.S. Gasoline Prices Lowest Since March '07 As Demand Falls

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104a.jpg" width="353">
Auto showrooms were notably quiet last month as U.S. sales of light vehicles fell to 10.56 million units (AR). The figure was the lowest level since February, 1983 according to the Autodata Corporation and Ward&#39;s Automotive News (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). The 15.5% m/m decline in October sales pulled them more than one-third below the same month&#39;s level of last year. Sales for the year so far have averaged a 13.76M annual selling rate, down 15.0% from the first ten months of last year. The level of October vehicle sales was quite a bit weaker than Consensus expectations for sales of 12.0M.
Sales of domestically made light vehicles fell nearly 20% m/m to 7.65M units (-36.7% y/y). The decline came on top of their 8.3% drop during September and year-to-date, sales were down 17.0% from the first ten months of last year. Domestically made light truck sales suffered further from higher gasoline prices and they fell 22.0% (-42.5% y/y). Truck sales this year were 23.2% lower than during the first ten months of 2007. Sales of U.S. made cars declined a less severe 15.2% from September. As drivers continued to shift purchases to relatively fuel efficient vehicles, car sales were down 8.2% versus the first ten months of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104b.jpg" width="353">
Sales of imported light vehicles were not immune to the developing recession in the U.S. Last month they fell 6.1% (-26.5% y/y) to 2.91M units on top of their 10.5% decline during September. The latest was the lowest level since October of 2002.Sales of imported autos actually rose m/m. The 0.3% rise to 1.95M units left them off just 3.7% from the first ten months of last year, but the latest was their lowest sales rate since January 2006. Year-to-date, sales were down 4.0% from the first ten months of 2007.Sales of imported light truck sales were not, however, immune to the effect from higher gasoline prices and they fell 14.4% m/m (-35.5% y/y). Sales were down 17.5% from the first ten months of last year.
Import&#39;s share of the U.S. light vehicle market recovered their loss of the prior two months and rose to 27.5%. (Imported vehicles are those produced outside the U.S. and do not include vehicles with the nameplate of a foreign manufacturer produced within the U.S.)
Who really made your car? from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfloctober2008_255a.pdf">here</a>.
Economy in lower gear through 2008 also from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2008_253a.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>10.56</td>
<td>12.50</td>
<td>-34.2%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.55</td>
<td>6.19</td>
<td>-26.1</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.60</td>
<td>4.25</td>
<td>-28.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.95</td>
<td>1.94</td>
<td>-21.1</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.01</td>
<td>6.31</td>
<td>-41.3</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>4.05</td>
<td>5.19</td>
<td>-42.5</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>0.96</td>
<td>1.12</td>
<td>-35.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>


</html>

Auto showrooms were notably quiet last month as U.S. sales of light vehicles fell to 10.56 million units (AR). The figure was the lowest level since February, 1983 according to the Autodata Corporation and Ward's Automotive News [...]

Vacant Auto Showrooms; U.S. Light Vehicle Sales Lowest Since 1983

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104a.jpg" align="left" border="0" height="265" width="353">
Auto showrooms were notably quiet last month as U.S. sales of
light vehicles fell to 10.56 million units (AR). The figure was the
lowest level since February, 1983 according to the Autodata Corporation
and Ward's Automotive News (Seasonal adjustment of the figures is
provided by the U.S. Bureau of Economic Analysis). The 15.5% m/m
decline in October sales pulled them more than one-third below the same
month's level of last year. Sales for the year so far have averaged a
13.76M annual selling rate, down 15.0% from the first ten months of
last year. The level of October vehicle sales was quite a bit weaker
than Consensus expectations for sales of 12.0M.
Sales of domestically made light vehicles
fell nearly 20% m/m to 7.65M units (-36.7% y/y). The decline came on
top of their 8.3% drop during September and year-to-date, sales were
down 17.0% from the first ten months of last year. Domestically made
light truck sales suffered further from higher gasoline prices and they
fell 22.0% (-42.5% y/y). Truck sales this year were 23.2% lower than
during the first ten months of 2007. Sales of U.S. made cars declined a
less severe 15.2% from September. As drivers continued to shift
purchases to relatively fuel efficient vehicles, car sales were down
8.2% versus the first ten months of last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104b.jpg" align="right" border="0" height="265" width="353">
Sales of imported light vehicles were not
immune to the developing recession in the U.S. Last month they fell
6.1% (-26.5% y/y) to 2.91M units on top of their 10.5% decline during
September. The latest was the lowest level since October of 2002.Sales
of imported autos actually rose m/m. The 0.3% rise to 1.95M units left
them off just 3.7% from the first ten months of last year, but the
latest was their lowest sales rate since January 2006. Year-to-date,
sales were down 4.0% from the first ten months of 2007.Sales of
imported light truck sales were not, however, immune to the effect from
higher gasoline prices and they fell 14.4% m/m (-35.5% y/y). Sales were
down 17.5% from the first ten months of last year.
Import's share of the U.S. light vehicle
market recovered their loss of the prior two months and rose to 27.5%.
(Imported vehicles are those produced outside the U.S. and do not
include vehicles with the nameplate of a foreign manufacturer produced
within the U.S.)
Who really made your car? from
the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfloctober2008_255a.pdf">here</a>.
Economy in lower gear through 2008 also
from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2008_253a.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>10.56</td>
<td>12.50</td>
<td>-34.2%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.55</td>
<td>6.19</td>
<td>-26.1</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>3.60</td>
<td>4.25</td>
<td>-28.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.95</td>
<td>1.94</td>
<td>-21.1</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.01</td>
<td>6.31</td>
<td>-41.3</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.05</td>
<td>5.19</td>
<td>-42.5</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>0.96</td>
<td>1.12</td>
<td>-35.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>
U.S. Gasoline Prices Lowest Since
March '07 As Demand Falls 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104c.jpg" align="left" border="0" height="265" width="353">
The retail price for a gallon of regular gasoline fell
by another twenty five cents last week. According to the U.S.
Department of Energy survey, the price decline came on top of a twenty
five cent drop during the prior week and the cost of $2.40 was the
lowest since February of 2007. Prices have now fallen roughly $1.75 per
gallon, or by forty percent, since their peak early this past July. The
latest decline was accompanied by a drop in the average price for all
grades of gasoline to $2.46 per gallon.
Yesterday, the spot market price for a gallon of regular
gasoline fell another sixteen cents from last week's average to $1.41.
In futures trading the November contract closed down further at $1.36
per gallon.
Weekly gasoline prices can be found in Haver's WEEKLY
database. Daily prices are in the DAILY
database.
The slowing of U.S. economic growth and the relatively high
price for gas has reduced demand for gasoline by
4.0% y/y, according to the U.S. Department of Energy. This was the
largest y/y drop since late 1995 (the latest four weeks versus the same
four weeks last year). The demand for all petroleum products also has
softened, falling 7.8% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104d.jpg" align="right" border="0" height="265" width="353">
These DOE figures are available in Haver's OILWKLY
database.
The price for a barrel of West Texas Intermediate crude oil
fell further last week to an average $65.68 per barrel, down by more
than one-half from the high in July of $145.66. In futures trading
yesterday, the two-month price for crude oil was $64.59 per barrel.
Last week ,prices for natural gas at $6.43 per mmbtu were near
their lowest level since October of last year. The average price this
month was nearly one-half below the high for natural gas prices in
early-July of $13.19/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">11/03/08</th>
<th scope="col">10/27/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon)</td>
<td>2.40</td>
<td>2.66</td>
<td>-20.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>65.68</td>
<td>68.18</td>
<td>-30.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
Global PMI's Forecasting RecordLow
in Manufacturing Production 
by <a href="/comment/Curley.html">Louise
Curley</a> November 4. 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104g.jpg" align="right" border="0" height="265" width="353">
After two sharp declines in September and October the global
PMI (Purchasing Managers Index) for manufacturing reached a record low
of 40.98 (50+ = expansion)in October, as can be seen in the first chart.
The PMI is a good predictor of manufacturing production. As an
example, the second chart shows the relationship between the PMI for
the Euro Area and the year-over- year changes in its manufacturing
production. The correlation, R, between the two series is .84, the R2
is .706 indicating that the PMI explains about 70% of the variation in
manufacturing production.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104e.jpg" align="right" border="0" height="265" width="353">
The Global PMI is based on the responses of 26 countries that
account for 83% of world manufacturing production. The latest figures
suggest that no country appears to be immune to the global slowdown in
manufacturing production. In the October data there is only one country
still in the expansion phase, that is, India, with an index of 52.19.
but it has been declining from a somewhat higher base than some of the
other countries. The third chart compares India with three other
emerging markets--China, Russia and Brazil.
The countries showing the lowest PMIs, and hence, the greatest
contraction, are Ireland, 39.69, Italy, 39.67 and Spain, 34.60, These
last are shown in the fourth chart. 

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104h.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104f.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">PURCHASING
MANAGERS' INDEXES&nbsp;</th>
<th scope="col">Brazil</th>
<th scope="col">China</th>
<th scope="col">India&nbsp;</th>
<th scope="col">Italy</th>
<th scope="col">Ireland</th>
<th scope="col">Spain</th>
<th scope="col">Russia</th>
<th scope="col">Singapore&nbsp;</th>
<th scope="col">Japan</th>
<th scope="col">UK</th>
<th scope="col">Euro Area</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">October 2008</td>
<td>45.68</td>
<td>45.23</td>
<td>52.19</td>
<td>39.67</td>
<td>39.69</td>
<td>34.60</td>
<td>46.45</td>
<td>45.80</td>
<td>42.22</td>
<td>41.49</td>
<td>41.10</td>
</tr>
<tr>
<td colspan="12">&nbsp;</td>
</tr>
</tbody>
</table>
EMU PPI Falls Again but Year/YearPace is Still Horrific 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 4. 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104i.jpg" align="left" border="0" height="265" width="353">
The EMU PPI fell by 0.2% in September after dropping by 0.5%
in August. WITH those two drops the three-month growth in the total
ex-construction PPI is STILL +2.5% saar. The year/year PPI is at 7.9%.
In between these the 6-month PPI has been blunted to 7.5% but its
growth rate too is still horrific. Core PPI inflation is dropping and
is &#8216;down&#8217; to 3.2%. But this report is uniformly being interpreted as
paving the way for an ECB rate cut. But of the four major EU nations we
show the core PPI trends for in the table below, only Italy is below
the ceiling for inflation that the ECB imposes on the HICP headline.
And this ECB is a SINGLE MANDATE central bank. It has an inflation
tolerance, period; it has no commitment to growth. But even with the
inflation picture this bad, the ECB is widely believed to be on the
brink of a second rate cut.
This shows us how far the ECB has come. Some European Finance
ministers continue to marginalize the risk. In Germany there is a
certain pretending in play that its banks and its economy are not hurt
by as much. But Europe&#8217;s connection to central and Eastern Europe
reinforce their sense of involvement with the stuff that is going
wrong. In addition there is the leverage and all the fancy financial
assets banks piled on their balance sheets. All of them did it.
In Europe the economic numbers are still diving. Today it is
auto registrations that look so weak. The EU Commission has cuts its
growth numbers to two marginally negative numbers over the next two
quarters. Time will tell if that forecast is overly optimistic. The
fact that the ECB is cutting rates with the inflation picture still as
poor as it is, tells a much clearer story of what Europe really fears
and how much.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> Euro
Area and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area-15</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total ex Construction</td>
<td>-0.2%</td>
<td>-0.5%</td>
<td>2.5%</td>
<td>7.5%</td>
<td>7.9%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.0%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>3.8%</td>
<td>4.1%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>0.1%</td>
<td>0.1%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>3.3%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>0.0%</td>
<td>0.2%</td>
<td>4.0%</td>
<td>4.9%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>-0.9%</td>
<td>-2.4%</td>
<td>-0.3%</td>
<td>19.1%</td>
<td>20.3%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>-0.5%</td>
<td>-0.6%</td>
<td>-1.8%</td>
<td>4.5%</td>
<td>5.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>6.8%</td>
<td>9.6%</td>
<td>8.3%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Gy Ex Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>3.9%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>2.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>-0.5%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>5.9%</td>
<td>7.3%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">It Ex Energy</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>3.2%</td>
<td>3.9%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK</td>
<td>-0.2%</td>
<td>-2.4%</td>
<td>-8.3%</td>
<td>16.2%</td>
<td>19.4%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">UK Ex Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>3.2%</td>
<td>9.1%</td>
<td>8.2%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Euro Area 15
Harmonized PPI
excluding Construction.</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The EA 15
countries are Austria,
Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain.</td>
</tr>
</tbody>
</table>
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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103g.jpg" width="353">
With recession on the horizon, questions have arisen as to how deep, how widespread and how long it will be. Forecasts of Gross Domestic Product for a number of countries, which may help in answering some of these questions, can be found in various Haver databases.
For the United States, Macroeconomic Advisors provides short-term quarterly and long-term annual forecasts of GDP that are updated quarterly. The most recent forecast covers the period from the third quarter of 2008 to the fourth quarter of 2010 and was updated on October 24. Oxford Economics provides quarterly and annual forecasts for ten years into the future for most countries. Their latest forecasts were issued October 16. The first chart shows the Oxford Economics annual forecasts for India and China and the second shows forecasts for Germany, Japan and the United States.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103h.jpg" width="353">
Eurostat publishes an annual series of GDP for all European Union countries as well as Croatia, Macedonia, Turkey, Norway and Switzerland. The last two years published are forecasts. For example, currently data are given for 2008 and 2009, both of which are forecasts. The latest data for these series were published on October 8. The OECD Outlook also publishes forecasts. These, however, are released only twice a year, in June and December. Sometimes the forecasts are outdated by subsequent events as at present.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">OXFORD ECONOMIC FORECASTS&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">&nbsp;2008</th>
<th scope="col">2009</th>
<th scope="col">2010&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France</td>
<td>2.11</td>
<td>0.85</td>
<td>0.11</td>
<td>1.63</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>2.39</td>
<td>1.47</td>
<td>0.16</td>
<td>1.47</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>1.36</td>
<td>-0.11</td>
<td>-018</td>
<td>0.91</td>
</tr>
<tr class="odd">
<td class="firstcol">United States</td>
<td>2.01</td>
<td>1.46</td>
<td>0.41</td>
<td>2.73</td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>2.01</td>
<td>0.70</td>
<td>-0.10</td>
<td>1.10</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>11.87</td>
<td>10.03</td>
<td>8.25</td>
<td>8.00</td>
</tr>
<tr class="odd">
<td class="firstcol">India</td>
<td>9.34</td>
<td>7.80</td>
<td>6.23</td>
<td>7.56</td>
</tr>
<tr>
<td class="firstcol">EUROSTAT FORECASTS</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>--</td>
<td>1.58</td>
<td>1.37</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>--</td>
<td>1.85</td>
<td>1.54</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>--</td>
<td>0.54</td>
<td>0.76</td>
<td>--</td>
</tr>
</tbody>
</table>
</body>
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With recession on the horizon, questions have arisen as to how deep, how widespread and how long it will be. Forecasts of Gross Domestic Product for a number of countries, which may help in answering some of these questions, can be [...]

Economic Forecasts in Haver Analytics

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103f.jpg" align="left" border="0" height="265" width="353">
The e-Zone economy shrank by 0.2% in 2008-Q2 and further
weakness lies ahead according to the EU Commission. The EU Commission
issued a statement warning that &#8220;In 2009, the EU economy is expected to
grind to a standstill.&#8217; The
Commission forecasts tiny GDP declines for the Zone in Q4 2008 and in
Q1 of 2009.
But the Markit PMI&#8217;s today seem to hint at the potential for
deeper declines. MFG tends to be one of the more volatile sectors in
recession so these PMIs, taken alone, overstate the case. The service
sector holds up better and service sector employment typically holds up
much better in recession in comparison to MFG. But both the Services
and the MFG PMIs for Europe have been weak. The e-Zone has not
experienced a recession since its formation. But as of September the
EMU services PMI was in the bottom 12% of its range and now the MFG
sector in EMU is the worst ever. 
Sneezing in Frankfurt -
Some might view the lack of recession since the region&#8217;s formation as
an asset for the region, but to me, it&#8217;s another sign: it points out
how poorly interconnected the various countries still are in EMU. It is
not a sign of greater resilience - far form it. Europe&#8217;s economy is
much less flexible than the US economy. One
view is that a diversified area has been put together and since we add
up GDP across the whole region it has become more stable than its
individual parts. But that is a portfolio theory argument and the parts
can only do this if they are not highly mutually correlated or less
that fully integrated. So the lack of commonality proves the point of
poor integration. Until someone can sneeze in Frankfurt and give
someone a cold in Paris, Europe is fragmented. 
The US is a much larger geographic and economic region and it
is so connected that the region &#8211; even with its differences -
experiences recessions. The resilience of EMU is yet another
manifestation of how the region is not yet fully integrated. Workers
within Europe are NOT indifferent as to whether they work in London, in
Frankfurt or in Paris, or more broadly, the UK, Germany or France.
Language and culture still separate European nations. Yet the downturn
this time has such common themes that it is dragging even the disparate
EMU into recession. That&#8217;s testament to the strength of the negative
forces this time around.
Some Structural differences Persist:
Not surprisingly, for Germany, France, Italy, Spain, Ireland and the
UK, the average country level correlation with OVERALL EMU MFG is 0.86.
For SERVICES it is a lower 0.82. Only in the UK and Ireland is the
service sector better correlated with the EMU&#8211;wide measure than is the
MFG index with its Europe-wide measure. That is probably due to the
UK&#8217;s separate use of the pound in lieu of the euro and the faster
impact on MFG flows than on services that FX rates exhibit. In the case
of Ireland, the fact that Ireland is geographically more plugged into
the UK economy and its cycles drives the rogue result. So it is basically the similarity in
MFG that binds Europe together while Services differences largely
persist across regions and tend to isolate euro-regions. This is in
keeping with the way competition has been meted out within Europe and
with the obviously more competitive nature of MFG with MFG anywhere &#8211;
at least in comparison with services. Even with wide open competition
in services, some services simply are local, like table service by a
waiter at a restaurant, plumbing and electrician services on site and
dry cleaning. Still, we know that some services that seem to be
&#8216;intrinsically local&#8217; have found ways to break down borders (ie video
rentals delivered either over the internet or by mail instead of via
the neighborhood store).
We will have to wait and see if the recession in Europe turns
out to be as benign as the EU commission forecast suggests. The German
finance ministry continues to tell how much better prepared Germany is
to take this recession than other countries. Time will tell. I remain a
Euro-skeptic.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> NTC MFG Indices</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-08</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td>41.10</td>
<td>44.97</td>
<td>47.55</td>
<td>44.54</td>
<td>46.79</td>
<td>49.50</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>42.88</td>
<td>47.36</td>
<td>49.68</td>
<td>46.64</td>
<td>49.49</td>
<td>51.81</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>40.59</td>
<td>42.97</td>
<td>45.79</td>
<td>43.12</td>
<td>46.19</td>
<td>49.52</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>39.67</td>
<td>44.42</td>
<td>47.07</td>
<td>43.72</td>
<td>45.24</td>
<td>47.72</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>34.60</td>
<td>38.32</td>
<td>42.40</td>
<td>38.44</td>
<td>39.82</td>
<td>43.94</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td>43.44</td>
<td>46.01</td>
<td>48.61</td>
<td>46.02</td>
<td>47.20</td>
<td>50.09</td>
<td>0.7%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td>48.14</td>
<td>50.81</td>
<td>52.46</td>
<td>50.47</td>
<td>51.77</td>
<td>52.37</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>39.69</td>
<td>43.70</td>
<td>44.88</td>
<td>42.76</td>
<td>43.60</td>
<td>45.86</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td>45.28</td>
<td>48.30</td>
<td>49.82</td>
<td>47.80</td>
<td>48.99</td>
<td>51.03</td>
<td>16.2%</td>
</tr>
<tr class="odd">
<td colspan="8">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>41.49</td>
<td>41.15</td>
<td>45.28</td>
<td>42.64</td>
<td>44.51</td>
<td>48.05</td>
<td>2.2%</td>
</tr>
<tr>
<td colspan="6" class="firstcol">Percentile is over range since March
2000</td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
</body></html>

The e-Zone economy shrank by 0.2% in 2008-Q2 and further weakness lies ahead according to the EU Commission. The EU Commission issued a statement warning that “In 2009, the EU economy is expected to grind to a standstill.’ The [...]

MFG is HOW Weak? Worst Since at Least March 2000 Across Much of EMU

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103d.jpg" width="353">
The value of construction put in place fell 0.3% during September. That reversed an August rise which was revised up slightly and the September decline was less than expectations for a 0.8% drop.Year-to-year, the decline in construction activity remained steady at a -6.6% pace.
A drop in the value of residential building activity led the September decline in overall construction. The 1.3% m/m fall reversed most an August increase and it was led by a 4.7% (-41.3% y/y) drop in single-family construction, off by two-thirds from its peak in early-2006. Building activity on multi-family units reversed nearly half of the August decline with a 2.7% (-1.7% y/y) rise while spending on improvements added to an August increase, up 2.4% m/m (-6.6% y/y).
During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103e.jpg" width="353">
The value of nonresidential building activity recovered 1.2% after an August decline. A 4.4% (5.7% y/y) rise in the educational category led the increase while airport building rose by nearly one-half. Increases here were offset by a 2.3% (-11.3% y/y) decline in the multi-retail category. Spending on health care facilities inched up 0.1% (4.5% y/y) while office construction increased 1.7% (7.4% y/y).
Public construction reversed its August gain with a 1.3% decline. The value of construction spending on highways &amp; streets led the weakness with a 1.5% drop (+1.7% y/y). The value of construction on highways &amp; streets is roughly one-third of the value of total public construction spending. Building activity of office space continued firm and rose 1.6% (34.4% y/y) but spending on health care facilities fell 3.5% (+4.0% y/y).
The more detailed categories of construction represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E907.HTM">Construction</a> (%)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.3</td>
<td>0.3</td>
<td>-6.6</td>
<td>-2.7</td>
<td>6.3</td>
<td>11.2</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.1</td>
<td>-0.1</td>
<td>-10.3</td>
<td>-6.9</td>
<td>5.5</td>
<td>12.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-1.3</td>
<td>1.9</td>
<td>-27.7</td>
<td>-19.8</td>
<td>1.0</td>
<td>14.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>1.2</td>
<td>-1.6</td>
<td>11.4</td>
<td>19.6</td>
<td>16.2</td>
<td>7.8</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-1.3</td>
<td>1.3</td>
<td>3.8</td>
<td>12.3</td>
<td>9.3</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body>
</html>

The value of construction put in place fell 0.3% during September. That reversed an August rise which was revised up slightly and the September decline was less than expectations for a 0.8% drop.Year-to-year, the decline in [...]

U.S. Construction Spending Fell Further

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

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**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

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**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

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**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

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Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

Winnie Tapasanun

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**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

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German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief

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